Test I- Multiple Choice

1. The defendant in a suit for quasi contract

a. is accused of negligence

b. hes accepted the offer of his action

c. has been enriched unjustly

d. has expressly agreed to the terms of the contract

2. In order to recover in a suit for a breach of contract, which of the following need not be shown?

a. Formation of a valid contract.

b. The defendant failed to perform.

c. The plaintiff suffered physical injury.

d. The plaintiff suffered economic injury.

3. Which of the following is required for the formation of the contract?

a. consideration c. a writing

b. promise by both parties d. lack of fraud

4. An owner of a large home with one hectare law went on vacation. A retired neighbor noticed that the
grass was getting very high. He took his electric grass cutter and spent the day cutting the grass. When
the owner returned he was very happy with the performance and expressed his gratitude. The neighbor

a. can recover the reasonable value of the services rendered based on quasi contract.

b. can recover the usual charge that he charges based upon the contract implied in-fact.

c. can recover at least the value of the value of the gasoline, depreciation, and oil used in the

work

d. can recover nothing, since there is no legal duty to pay under the facts given.

5. Saint Paul School of Business and Law is soliciting bids for a new computer. ABC Corp. submits a bid of
P2,000,000. The contract is given to XYZ Corp. which submitted a bid of P2, 500,000.

a. Saint Paul is obligated to give the contract to ABC Corp. because it accepted

with the lowest bid.

b. Saint Paul made an offer which was accepted by XYZ Corp.

 c. ABC and XYZ made offers.

d. Saint Paul made an offer, but ABC had no right to accept.

6. S offers to sell B 20 cartoons of mangoes at P50 per kilo. Before B can accept the offer, S dies.

a. B may accept the offer.

b. The offer terminated when S died.

c. B may accept the offer because the contract between B and S is an option contract.

d. Th offer is effective until B learns of S death.

7. Barney telephones Fred and tells him that he is offering to n sell his pet dog for P4,000.

He tells fred that the offer is good for one week.

Barney can revoke the offer at any before Fred accepts.

Barney cannot accept the offer for one week.

If Barney were a pet dog merchant, he would be bound.

Barney’s was only an invitation to offer.

8. Luis offers the paint to Roger’s house for P25,000. Roger tell him, “ I can’t afford that price.

Will you do it for P11,000?

Luis’s was terminated by Roger’s counteroffer.

Luis’s offer was terminated by operation of law.

Luis’s offer has not terminated. Roger can still accept his offer.

Luis’s offer has not been rejected by Roger?

9. A letter of acceptance, in answer to an offer made by letter, is effective when

a. deposited in the mail c. signed by the offeree

b. received by the offeror d. written

10. Furniture Warehouse is quitting business. The manager writes to the Law firm of the Crook and Law
and offers to sell the firm a conference table for P10,000. The letter also states, “ Because this is a one
time offer, you must respond in person. This offer cannot be modified for any reason.”

a. Crook and Law may accept the offer by letter because the mail is always a reasonable

manner of acceptance.

b. Crook and Law may accept the offer by phone because the time for acceptance is limited.

c. Crook and Law may accept it in any reasonable manner.

d. Crook and Low must accept in person because the offer requires it to do so.

11. Maryowns an attractive diamond that she originally purchased for P25,000. Unfortunately, Mary was
required to raise cash on short notice and, therefore, sold her ring to Anna for P5,000.

a. This is not binding contract because Anna received a benefit.

b. This is a binding contract because Mary’s detriment was excessive.

c. this is a binding contract supported by legally sufficient consideration.

d. We cannot determine if a binding contract existed because a court must assess Mary’s

wisdom, considering all relative factors, in determining if the price constituted valid

consideration.

12. Which of the following is true regarding Statue of Frauds?

a. The writing required is a specific form.

b. Both parties to the contract must sign in in order to satisfy the writing requirement.

c. Either party to a contract must sign in order to satisfy the writing requirement.

d. Only the party to be charged need in signs a contract.

13. One of exceptions to the statute of frauds, occurs at times,when

a. there is oral evidence of fraud

b. there is written evidence of fraud

c. the contract is partially performed

d. the contract involves the sale of goods worth of P500 or more.

14. Marylou agrees to sell her couch to Stan. Stan finds the couch that he likes better and ask Marylou
to cancel the contract. Marylou, who had been having second thoughts anyway, readily agrees. The
second agreement agreement between Marylou and Stan is example of

a. accord and satisfaction c. novation

b. rescission d. delegation

15. Ramon wants to move out of his apartment but he has six months left to run on his lease. Fred would
like to move in Ramos apartment. Ramons landlord agreed to the substitution and Fred execute a new
lease. The parties have agreed to a

a. novation but the landlord can sue Ramon if Fred doesn’t pay the rent.

b. novation and Fred only is responsible for the rent

c. rescission but the landlord can sue Ramon if Fred doesn’t pay the rent.

d. rescission and the landlord cannot sue Ramon if Fred doesn’t pay the rent

16. The transfer of rights created by contract to the third party is

a. an assignment c. never permissible

b. a delegation d. always permissible

17. A paryt is excused from the performance when his performance become impossible.

Which of the following is not an example of impossibility of performance?

The president of the offerror-companies dies.

The subject matter of the contract is destroyed.

One of the parties to the personal service contracts dies.

A change in law makes the performance illegal.

18. When a breach of contract is material, the nonbreaching party

a. May repudiate the contract only

b. has no recourse if there has been partial performance by either party

c. may sue only for anticipatory breach

d. is excused from the performance of contractual duties and has cause of the action to

sue for damages cause by the breach.

19. Floral Inc. agreed to sell plates “ 1,000 red roses at P6.00 each”, and plates agrees. A hail storm

Ruined Floral’s own field which usually, but not always, was Floral’s supply, but the neighbors were

all untouched.

Floral Inc. is excused from performance because of impossibility.

Floral Inc. must provide red roses.

Floral is excused by commercial impracticality.

Floral Inc. is accused by the doctrine “Act of God”.

20. Irma purchase a toaster from AAA appliance. The toaster does not work properly and

Demands the return of her money. Irma is seeking

Reformation c. specific performance

Rescission d. compensatory damages

21. Carla and Dot entered into written agreement under the terms of which

Dot to deliver 13 tones grapes to Carla with in 3 days. The parties made a mistake because they have

Meant to state delivery would be within 3 days, Dot would seek

Specific performance c. reformation

Rescission d. an action for damages

22. A contract that has been completed to the extent of 98% is, generally speaking,

An example of

Anticipatory breach c. satisfactory performance

Material breach d. substantial performance

23. Which of the following is a duty owed by the principal to the agent?

a. indemnification c. notice

b. loyalty d. accounting

24. which of the following is an irrevocable agency?

a. agency for a term of 5 years.

 b. Agency coupled with an interest

c. Gratuitous Agency

d. There is no such thing as an irrevocable agency.

25. Mr. X was appointed general agent of ABC Drugstore. It become necessary to purchase

An airconditioning unit to keep the drugstore well ventilated in order to protect the medicines.

The matter had never been discussed with the principal.

Mr. X has authority by estoppel to purchase the aircon unit.

Mr. X has implied authority to purchase the aircon unit.

Mr. X has no authority to purchase the aircon unit.

Mr. X has no authority to purchase the aircon as there is no emergency.

26. Which of the following is not implied definition of the partnership?

a. Voluntary agreement c. sharing of profits and losses

b. two or more persons d. limited liability of one or more partners

27. Which of the following is true regard to general partnership only?

a. Bankruptcy/ insolvency of any partner will cause dissolution of the partnership.

b. General partners have equal management rights.

c. illegality of partnership purpose will cause dissolution.

d. The partnership can be dissolve by judicial decree.

28. Sam leases a corner lot where he plans to operate a gas station. Sam’s landlord,Bert, receives 5% of

Sam’s monthly gross receipts. Sam and Bert

Are general partners in the opration of the gas station.

Have formed a limited partnership, because Bert receives money only if a profit is made.

Are tenants in partnership of the corner lot.

Have a landlord-tenant relationship and nothing more.

29. Which of the following is not ground for dissolution of a partnership by judicial decree?

a. death of a partner

b. dissensions between the partners

c. mental in capacity of a partner

d. wrongful act of a partner which destroy the partnership business.

30. Linda hire Cecil to manageher gift shop. Cecil’s salary is base on a percentage of sales

Made by the shop. Linda and Cecil must agree on all major management decisions.

Cecil is otherwise in charge. The relationship between Linda and Cecil is

A partnership because Cecil receives a share of the profits

A partnership because Cecil has equal rights of management.

Not a partnership because Cecil has no ownership interest in the business

Not a partnership because Cecil and Linda did not sign a written agreement.

31. Ralf and Edna agree to operate a partnership for a period of 3 years. After 2 years,

Edna decided to quit. She inform Ralph and all their customers. Ralph

Can sue Edna for a specific performance

Cannot sue Edna for specific performance but may sue her for breach of contract

Cannot sue Edna because the partnersip is voluntary.

Cannot sue Edna but may continue to operate the partnership.

32. when a limited partnership is formed, a(n)________________ must be filled with the Securities and

Exchange Commission.

Articles of partnership

Certificate of limited partnership

Affidavit of a limited partner that he will not participate in the

Management of the partnership.

Affidavit stating the amount contributed by each limited partner.

33. A certificate of limited partnership may provide that which of the following

Will not dissolve the business?

Bankruptcy of a general partner

Death of a general partner

Illegality of the partnership business

Judicial decree

34. An assignment of interest of a limited partner

a. automatically dissolve the partnership

b. makes the assingnee a limited partner with full right.

c. gives the assignee a voice in the management

d. does not dissolve the limited partnership

35. Ann, Bart, and Carla were parners in a profitable restaurant business.

Ann died living her husband, Don, her share in the business.

Don is now partner with Bart and Carla

Don’s will received Ann’s share of the profits so long as Bart and Carla

Operate the restaurant.

Don is entitled to the value of Ann’s share of the business.

Don is a limited partner.

36. Jones and Smith have formed a partnership. Jones contributed P75,000 and Smith P25,000.

Jones and Smith capital balances at the end of the year showed the same balances.

A P10,000 profit was realized after the first year of operation. No agreement as to profit distribution

Exist. Both wish a distribution of profits.

Each is entitled to P5,000.

Jones is entitled to P7,500 and Smith to P2,500.

Neither is entitled to anything

Jones has total say as to profit distribution because he has controlling interest

In the business

37. The key element of determining if a partnership exist is

a. The intent to associate c. a length of the partnership agreement

b. a written agreement d. the lack of knowledge among the partners

38. When two or more persons represent themselves as partners in dealing with a third person,

When in fact they are not partners at all, the law recognizes

A corporation c. a partnership by estoppel

A proprietorship d. no partnership at all

39. A formal accounting of partnership affairs is proper

a. only when the partnership is dissolved.

b. only at the end of a taxable year.

c. any time it is requested by a partner.

d. any time it is considered just and reasonable

40. In the absence of partnership agreement

a. a partnership is managed by the senior partner.

b. a partner’s voice in the management is determine by the amount of capital contribution

c. all general partners have an equal right in managing the business

d. a court order must determine management authority

41. when a new partner is admitted to an existing partnership

a. any capital contribution made by the new partner could be use to satisfy

existing partnership debts.

b.any capital contribution made by the enw partner could be use to

 satisfy future partnership debts.

The new partner is personally liable for existing debts.

The new partner must inform the partnership’s creditors of his participation

In the partnership.

42. Ted, Fred and Jed enter a partnership. Ted undertakes independent consulting for an outside firm

Without the consent of Fred or Jed. Ted’s compensation from the outside firm is considered

His own personal income c. partnership income

Real property d. illegal income

43. A partners interest in the partnership consist of

a. a proportionate share of the profits earned and surplus

b. specific real property of the firm

c. specific personal property of the firm

d. a proportionate share of all the chattels of the firm

44. In court action for quasi-delict against a partnership, partners have

a. no liability c. solidary liability

b. individual liability d. joint liability

45. Partners have what liability arising from contracts entered into by the partnership?

a. joint c. no liability unless they ratify

b. solidary d. proportionate

46. X breaches a fiduciary duty to the XYZ partnership. His breach results in a loss

To the partnership of P10,000 and a profit to him of P20,000. He must pay to the partnership

P10,000 representing the loss

P30,000

Zero, because the loss is compensated against profits which was earned by the

Partnership through his extraordinary efforts.

P20,000

47. Which of the following is not a power of the shareholders/stockholders?

a. elect board of directors

b. elect president of the corporation

c. vote on changes in the by laws

d. bring a derivative suit on behalf of the corporation

48. For which of the following acts is a director most likely to be found personally liable?

a. investment of corporate funds in a venture that losses money.

b. failure to supervise president actions.

c. creation of new product line which is unsuccessful

d. breach of warranty based on the faulty product manufactured by the corporation

49. Which of the following statements best describe s an advantage of the corporate

Form of doing business?

Day-to-day management is strictly the responsibility of the directors.

Ownership is contractually restricted and is not transferable.

The operation of the business may continue indefinitely

The business is free from government regulation

If the stockholder

Wants to use corporate shareholder records for personal business

Employs an agent to inspect the books and records

Intends to commence a shareholder’s derivative suit

Is investing management misconduct.